Acquisitions

9 Months Ended

Apr. 30, 2020

Fiscal 2020

Hu-Friedy: On October 1, 2019, we purchased all of the issued and outstanding membership interests of Hu-Friedy Mfg. Co. LLC (“Hu-Friedy”), for total consideration (net of cash acquired), excluding acquisition-related costs, of $716,542, consisting of $662,151 of cash and $54,391 of common stock consideration (subject to adjustment), plus contingent consideration payable in cash. The additional contingent consideration payments are (i) subject to the achievement of certain commercial milestones through March 31, 2021 ranging from zero to a maximum of $50,000 and (ii) contingent upon changes in our stock price from the date of closing through a future date subject to a registration rights agreement. See Note 9, “Fair Value Measurements,” for

further details regarding these contingent payments. Hu-Friedy is a leading global manufacturer of instruments and instrument reprocessing systems serving the dental industry and is included in our Dental segment.

Fiscal 2019

Omnia: On February 1, 2019, we purchased all of the issued and outstanding stock of Omnia S.p.A. (“Omnia”), an Italian-based market leader in dental surgical consumables solutions, for total consideration (net of cash acquired), excluding acquisition-related costs, of $19,007, consisting of $15,797 of cash and $3,210 of common stock consideration, plus additional earn-outs ranging from zero to a maximum of $5,800, which is payable upon the achievement of certain performance-based financial targets. Omnia’s business consists of a wide-ranging portfolio of sutures, irrigation tubing and customized dental surgical procedure kits, with a focus on procedure room set-up and cross-contamination prevention and is included in our Dental segment.

CES business: On August 1, 2018, we acquired certain net assets of Stericycle Inc. related to its controlled environmental solutions business (“CES business”) for total cash consideration, excluding acquisition-related costs, of $17,047. The CES business is a leading provider of testing and certification, environmental monitoring and decontamination services for clean rooms and other controlled environments to ensure safety, regulatory compliance and quality control, and is included in our Life Sciences segment.

The following table presents our purchase price allocations of our material acquisitions:


	2020		2019
Purchase Price Allocation	Hu-Friedy⁽¹⁾		Omnia		CES Business⁽²⁾
	(Preliminary)		(Final)		(Final)
Purchase Price:
Cash paid	$	662,151	$	15,797	$	17,047
Fair value of contingent consideration	38,371		—		—
Common stock issued	54,391		3,210		—
Total	$	754,913	$	19,007	$	17,047

Allocation:
Property and equipment	38,571		1,285		539
Intangible assets:
Customer relationships	226,000		10,206		8,100
Technology	32,000		1,257		—
Brand names	112,000		1,600		—
Goodwill	277,927		10,539		6,137
Deferred income taxes	—		(2,346)		—
Inventories	60,596		—		—
Other working capital	7,819		1,673		2,271
Long-term debt	—		(5,207)		—
Total	$	754,913	$	19,007	$	17,047

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(1)During the second quarter of fiscal 2020, we paid $25,000 to settle a portion of the contingent consideration, and during the third quarter of fiscal 2020, we paid $35,000 to repurchase a portion of the common stock issued, both of which were included in Acquisitions, net of cash acquired in the Condensed Consolidated Statement of Cash Flows. See Note 9, “Fair Value Measurements” for additional information.

(2)The excess purchase price over net assets acquired was assigned to goodwill, all of which is deductible for income tax purposes.

Unaudited Pro Forma Summary of Operations

The following pro forma summary of operations presents our operations as if the Hu-Friedy acquisition had occurred as of the beginning of fiscal 2019. In addition to including the results of operations of this acquisition, the pro forma information gives effect to amortization of the step-up in inventory, depreciation of the step-up in property and equipment, the interest on additional borrowings, the amortization of intangible assets and the issuance of shares of common stock. On an actual basis, the Hu-Friedy acquisition contributed $35,444 and $110,818 to our consolidated net sales for the three and nine months ended April 30, 2020, respectively.


	Three Months Ended April 30,						Nine Months Ended April 30,
Pro Forma Summary of Operations	2020		2019		2020		2019
Net sales	$	236,933	$	278,423	$	821,602	$	836,228
Net income	$	15,787	$	5,624	$	14,273	$	43,880
Earnings per common share:
Basic	$	0.37	$	0.13	$	0.34	$	1.03
Diluted	$	0.37	$	0.13	$	0.34	$	1.03

The pro forma information presented above does not purport to be indicative of the results that actually would have been attained had the Hu-Friedy acquisition occurred as of the beginning of fiscal 2019.